Aurora revenue cap possible: regulator

The Commerce Commission has the power to intervene over the share residents in each region in Otago pay in lines charges to fund Aurora to fix its dilapidated network

The revelation at a public meeting in Wanaka comes after concern from Central Otago and Wanaka residents they were being asked to pay more in a draft decision put forward by the Commerce Commission.

Former Delta staffer and whistle-blower Richard Healey was at the briefing, organised by the commission to inform and consult residents, and raised the issue.

"We have talked about the inequity of the charges between each region, but one aspect not touched on here today is that it is absolutely within the commission’s remit to use a mechanism to stop it.

"They can set the revenue for Central Otago, Wakatipu and Dunedin, but they have so far declined to do that," Mr Healey said.

Commerce Commission price quality manager Dane Gunnell said the commission could not set prices, but it could ask Aurora to set a cap on revenue it derived from Central Otago.

There were "pros and cons" to doing that, but the commission would be "very keen to hear if that is what the community thinks is a solution" to eliminating the differential between the regions, he said.

Commerce Commission head of energy, airports and dairy Andy Burgess said in a follow-up email that setting regional caps was a complex process and there was no guarantee it would result in Central Otago residents paying less and Dunedin residents paying more.

"There are pros and cons to this approach, as lines charges would then reflect the specific investment and operational costs of each region in the future.

"It is possible that under a regional approach Central Otago or Queenstown pay more compared to our draft decision, not less.

"We have not undertaken a full analysis of this approach given its complexities and the time constraints we have under this process, but we have agreed to provide more information to consumers on our thinking around regional revenues."

At the meeting Mr Burgess said there had not been enough investment in the infrastructure historically.

"I understand a lot of people outside the Dunedin area want to point the finger at DCC and there may be an argument for that, but we as the commission just have to act within the scope of our powers.

"Within our powers we have taken Aurora to court and fined them $5 million, which is not coming out of consumer bills, so we did take action against them."

Aurora is a wholly owned subsidiary of Dunedin City Holdings Ltd, which is owned by the Dunedin City Council, and distributes electricity to more than 90,000 homes, farms and businesses in Dunedin, Central Otago and Queenstown Lakes.

In June Aurora filed an application with the Commerce Commission for a customised price path to enable it to spend $365 million on infrastructure and $253 million on operating expenditure.

It sparked outrage when it was revealed customers in Central Otago and Wanaka would face the largest increase in line charges, households defined as medium users set to pay $612 more a year in 2026.

Wanaka businessman Peter Marshall wanted to know why there had been no consultation about how Aurora had got to this position.

"Why aren’t we asking the DCC what happened to all those dividends; what happened to that top-up that went to the Forsyth Barr stadium? Why aren’t we more p...... off about it?"

 

Public consultation sessions were held in Dunedin and Central Otago in August, but the Wanaka and Queenstown sessions were postponed because of the country’s return to lockdown.

Mr Burgess said of the 150 submissions received so far nearly half were concerned about pricing and 16% were concerned about Aurora’s accountability.

Submissions close on December 10 and a final decision will be published on March 31. The recommendations will take effect from April 1 next year.